Monsanto expands into fruits and vegetables

[Guest guest]

Important to all us raw and/organic fooders, who needs

the genes of animals put in our fruits and veggies?

 

News Update From The Campaign

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Dear News Update Subscribers,

 

In a move that opens the door to the aggressive

marketing of biotech fruits and vegetables, Monsanto

has agreed to purchase Seminis, the world's

largest producer of fruit and vegetable seeds, for

about $1 billion.

 

Monsanto seems to be downplaying the significance of

this move in relation to genetically engineered fruits

and vegetables. In a somewhat coy statement, their

chief executive officer, Hugh Grant, stated " In the

long term, there may be opportunities in biotech. "

 

Many activists feel this is a gross understatement and

that Monsanto will push hard to bring genetically

engineered vegetables and fruits out sooner rather

than later. Some insiders speculate that Monsanto

wants to get a significant variety of biotech crops

into the marketplace quickly while the Food and Drug

Administration (FDA) regulations are still incredibly

lax. (there is really no research in this by the FDA

- frightening - Laura)

 

Until recently, a significant focus of Monsanto was to

move forward on the introduction of genetically

engineered wheat. However, U.S. and international

opposition to biotech wheat caused the company to

shelve those plans in the short term.

 

Some feel this new grandiose move by Monsanto into the

fruit and vegetable market is a strategic move to gain

broader acceptance of biotech crops. They

feel Monsanto will then again try to move forward with

genetically engineered wheat.

 

Monsanto is considered by many to be one of the

world's most controversial companies. The company has

faced numerous legal charges over the years

that continue even in recent days.

 

In 2001, Monsanto was found guilty of releasing tons

of PCBs into the city of Anniston, Alabama and

covering up its actions for decades. The jury

found Monsanto liable on all six charges it

considered: negligence, wantonness, suppression of the

truth, nuisance, trespass and outrage. Under Alabama

law, the charge of " outrage " requires conduct " so

outrageous in character and extreme in degree as to go

beyond all possible bounds of decency so as to be

regarded as atrocious and utterly intolerable in

civilized society. "

 

Most recently, on January 6, 2005, the U.S. Securities

and Exchange Commission (SEC) filed two settled

enforcement proceedings charging Monsanto

with making illicit payments in violation of the

Foreign Corrupt Practices Act (FCPA). It appears that

Monsanto had bribed more than 140 current and

former Indonesian government officials and their

families by an amount totaling more than $700,000

between 1997 and 2002. The cash was paid to allow the

company to develop genetically engineered crops in

Indonesia.

 

The SEC lawsuit charged Monsanto with violating the

FCPA and imposed a civil penalty of $500,000. They

also issued an administrative order finding that

Monsanto violated the anti-bribery, books-and-records,

and internal-controls provisions of the FCPA and

ordered the company to cease and desist from

such violations. Further, the U.S. Department of

Justice filed criminal information charging that

Monsanto violated the anti-bribery and books and

records provisions of the FCPA. Monsanto agreed to pay

a $1 million monetary penalty to defer prosecution

charges by the Department of Justice.

 

Considering the track record of Monsanto, you might

think that the FDA would closely scrutinize any new

genetically engineered crops the company plans to

bring to market. But under current FDA regulations,

Monsanto is not even required to notify the agency

that they are bringing out a new genetically

engineered crop (unless the nutrient value is

significantly altered or the product contains a known

allergen.) Apparently the FDA trusts Monsanto

to do the right thing. Do you?

 

Posted below are three articles about Monsanto's $1

billion purchase of Seminis. The first article from

the Wall Street Journal is titled " Monsanto Co. to Pay

$1 Billion For Produce-Seed Firm Seminis. " The second

article from the Associated Press is titled " Monsanto

to buy seed company Seminis in

$1B deal. " And the third article from The New York

Times is titled " Monsanto Buying Leader in Fruit and

Vegetable Seeds. "

 

Craig Winters

President

The Campaign

PO Box 55699

Seattle, WA 98155

Tel: 425-771-4049

E-mail: label

Web Site: http://www.thecampaign.org

 

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Monsanto Co. to Pay $1 Billion For Produce-Seed Firm

Seminis

 

By SCOTT KILMAN

Staff Reporter of THE WALL STREET JOURNAL

January 25, 2005

 

Monsanto Co., looking for places to grow after

converting many of America's corn, soybean and cotton

farms to biotechnology, agreed to buy Seminis Inc.

for $1 billion in order to expand its sights to

vegetables and fruit.

 

The cost of the acquisition, which also calls for the

assumption of an additional $400 million in debt,

startled some investors. That's because, by some

measures, the closely held Oxnard, Calif., company was

valued at slightly more than $300 million in 2003,

when a mountain of debt forced Seminis to go private.

 

In New York Stock Exchange composite trading yesterday

at 4 p.m., Monsanto traded at $54.10, off $3.62, or

6.3%.

 

Monsanto executives yesterday defended the cost of the

deal, its biggest since the late 1990s, arguing that

while Seminis brings little in the way of

biotechnology skills, it opens up new growth

opportunities. Seminis, which has developed crops such

as the baby carrot and the personal-size

watermelon through conventional breeding, controls

roughly one-third of the seed used to grow the fruits

and vegetables found in most U.S. supermarkets.

 

Cobbled together in the 1990s by Alfonso Romo Garza, a

Mexican entrepreneur and Olympic horseman who hoped to

become as dominant marketing vegetable seeds as

Monsanto was with seeds for larger-scale crops,

Seminis controls 23% of the world's tomato-seed

market, 34% of the hot pepper-seed market and

38% of the cucumber-seed market.

 

Executives at Monsanto, St. Louis, are playing down

their interest in genetically modifying these sorts of

crops anytime soon. Although U.S. consumers have

largely accepted the presence in their groceries of

genetically modified ingredients made from soybeans

and corn, opinion research suggests that more shoppers

would be leery if confronted with something they eat

whole.

 

Still, Monsanto executives made clear that they hope

to genetically modify vegetables and fruit in the

future, if the market conditions are right. Seminis

" makes a great platform, " said Brett Begemann, the

Monsanto executive vice president who will oversee the

acquired company.

 

The planned acquisition, which allows Monsanto to

leapfrog DuPont Co. as the world's biggest marketer of

conventional and genetically modified seed,

is a new direction for Hugh Grant, who returned the

company to popularity on Wall Street since becoming

Monsanto's chief executive officer in May 2003 by

cutting costs and narrowing its focus to a handful of

crops. The wheat business was jettisoned, for example.

Monsanto's stock price has roughly doubled during Mr.

Grant's tenure.

 

After years of cost cutting and retrenchment, Monsanto

is eager to find new places to sell seed. Monsanto

already saturates much of the American

grain belt. Although the European Union is lifting its

de-facto moratorium on genetically modified crops, the

business of selling biotech seeds there

will be negligible for the foreseeable future.

 

Monsanto executives figure they can speed development

of new vegetable varieties by Seminis by giving it

access to technology such as molecular markers, which

help plant breeders track desirable traits. Seminis,

the world's biggest produce-seed firm, generated a net

loss of $16.3 million on sales of $525.8 million in

the fiscal year ended Sept. 30.

 

***************************************************************

 

 

Monsanto to buy seed company Seminis in $1B deal

 

ST. LOUIS (AP) - Agricultural biotechnology giant

Monsanto (MON) said Monday it will buy vegetable and

fruit seed company Seminis for roughly $1B in

cash, broadening its portfolio of seeds and tapping

into the trend of healthier diets.

 

Monsanto said it will assume an additional $400

million in debt by Seminis, the supplier of more than

3,500 seed varieties to commercial fruit and

vegetable growers, dealers, distributors and

wholesalers in more than 150 countries.

 

Monsanto - already staking more of its future on seeds

that include genetically modified ones able to

withstand weeds, insects and disease - said it also

would make a performance-based payment of up to $125

million by the end of fiscal 2007.

 

" The addition of Seminis will be an excellent fit for

our company as global production of vegetables and

fruits, and the trend toward healthier diets, has been

growing steadily over the past several years, " said

Hugh Grant, Monsanto's chairman, president and chief

executive.

 

Grant called 10-year-old Seminis, with sales of $526

million in its 2004 fiscal year, " uniquely positioned

to capitalize on this fast-growing segment of

agriculture and the acquisition likewise expands

Monsanto's ability to grow. "

 

Citing the pending acquisition, Monsanto pared its

estimate for fiscal 2005 earnings to 86 cents to $1.06

a share, down from a previous range of $1.56

to $1.71. Analysts surveyed by Thomson First Call

were expecting Monsanto's earnings of $2.05 a share.

 

Pending regulatory approvals, Monsanto expects the

deal to close sometime between March and May. The

company said the deal should be accretive to

earnings per share, cash flow and revenue growth in

fiscal year 2006, its first full year of operation.

 

The move comes two months after Monsanto's newly

formed holding company American Seeds acquired the

seed company Channel Bio for $120 million cash.

Monsanto formed American Seeds to support regional

seed businesses with capital, genetics and technology

investments.

 

Seminis will be a wholly owned Monsanto subsidiary,

headed by its existing president and CEO.

 

Monsanto said it expects to continue Seminis' focus on

developing products using advanced breeding

techniques, with biotech applications an option

well down the road.

 

That push comes as biotech crops are flourishing in

the United States and taking root overseas, accounting

for several tens of billions of dollars in

crops in five leading countries, despite European

resistance to the technology.

 

Alfonso Romo, chairman and chief executive of Seminis,

said " we are bringing a complementary technology base

and specialized expertise that can not only support

economic growth for farmers, but contribute to the

health and nutrition of consumers on a global scale. "

 

***************************************************************

 

 

January 25, 2005

Monsanto Buying Leader in Fruit and Vegetable Seeds

The New York Times

By ANDREW POLLACK

 

In at least a temporary diversification away from

genetically modified crops, Monsanto, the agribusiness

company, agreed yesterday to pay

about $1 billion to acquire Seminis, the world's

largest producer of fruit and vegetable seeds.

 

Until now, Monsanto has focused on corn, soybeans and

cotton seeds, and on using genetic engineering to

produce crops that are resistant to herbicides

and insects. (Their seeds often need to be sprayed

with Round-up in order to germinate, and are sterile,

thereby not allwoing the farmer to save their own

seed. Laura)

 

But executives said yesterday that Monsanto would

develop new vegetable varieties using conventional

breeding. They said the fruit and vegetable

seed business could grow without biotechnology, based

on a consumer movement toward healthier diets.

 

" It's fine to dream, but you have to decide what

you're going to do tomorrow morning, " Monsanto's chief

executive, Hugh Grant, said about biotech

fruits and vegetables during a conference call with

analysts. " In the long term, there may be

opportunities in biotech. "

 

Some genetically engineered papaya and squash are on

the market. The first biotech crop to be

commercialized was the Flavr Savr tomato, developed

by a biotechnology start-up that Monsanto acquired.

But that tomato did not catch on.

 

Now industry executives say it is difficult to bring

new biotech fruits and vegetables to market because of

consumer resistance. Also, fruits and vegetables are

small crops, making it difficult to recoup development

and regulatory costs. A few years ago, Monsanto

decided to focus its biotech efforts on major crops.

 

The acquisition comes as Monsanto has been shifting

its business from agricultural chemicals to seeds and

biotechnology. Over the last decade, it has

aggressively acquired seed companies, mainly in the

corn and soy business, igniting some concerns that the

markets were becoming too concentrated.

 

The new acquisition not only makes Monsanto the

largest supplier of vegetable seeds in the world, but

also, according to the company's calculations, the

largest seed and biotech company over all. It would

surpass DuPont, which owns the corn seed giant Pioneer

Hi-Bred, in terms of revenues derived from seeds and

biotech traits.

 

Seminis, based in Oxnard, Calif., had sales last year

of $526 million, with its leading products being

tomato, cucumber, beans and pepper seeds. Its

main brands are Seminis, Asgrow, Petoseed and Royal

Sluis and it sells mainly to farmers, not gardeners.

But, with partners, it has recently started to develop

some consumer items, like the Bambino miniature

watermelon and Lettuce Jammers, lettuce in the shape

of a taco shell.

 

Its main rivals in fruit and vegetable seeds are

Syngenta of Switzerland and Limagrain of France. Less

than 1 percent of Seminis's sales come from

genetically modified seeds.

 

Under the deal, Monsanto will pay about $1 billion in

cash and assume $400 million in debt. It might also

pay an additional sum of up to $125 million by the end

of fiscal year 2007 based on the performance of

Seminis.

 

Seminis was started in 1994 by a Mexican entrepreneur,

Alfonso Romo Garza, who decided to create a giant

vegetable seed company by acquiring

smaller ones. The company went public in 1999 at $15 a

share, though Savia, a Mexican company affiliated with

Mr. Romo, retained majority ownership.

 

But the company suffered severe losses and in 2003,

majority control was acquired for $3.78 a share by Fox

Paine & Company, a buyout firm.

 

Fox Paine, based in Foster City, Calif., paid $163

million for what is now a 58 percent stake in Seminis.

New management helped spur growth and

restore profits before special charges. Based on the

$1 billion Monsanto is paying, Fox Paine will get

about $580 million, the president and co-founder,

Dexter Paine, said.

 

Shares of Monsanto, which have nearly doubled in the

last year, fell $3.62, or 6 percent, yesterday to

$54.10, as investors seemed to be surprised by the

size and price of the deal.

 

" I think the market was expecting strategic

acquisitions of the bolt-on variety, " like small

corn-seed companies, said Kevin McCarthy, analyst at

Banc of America Securities. " This deal is clearly in a

different league. "

 

Frank Mitsch, analyst at Fulcrum Global Partners,

pointing to how much the price of Seminis has risen

since Fox Paine bought it in 2003, said, " It does

make one step back and wonder as to why this

transaction didn't occur 18 months ago. "

 

Monsanto has said that sales of its genetically

modified soy, corn and cotton continue to grow, but

that it has had trouble expanding genetic

engineering to other crops.

 

It dropped an effort to introduce genetically modified

wheat last year after some American farmers said such

an introduction might hurt exports. And

its genetically modified grass for golf courses has

run into opposition from environmental groups.

 

With fruits and vegetables, it said, it will analyze

genes in the crops to speed conventional breeding of

improved varieties but would refrain for now from

putting new genes into the crops.

 

(I have a copy of " The Future Of Food " which exposes

the GM that I am willing to rent out for $2.00 and

shipping)

 

 

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Peace, Good Health and Joyful Love

Laura

 

 

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